The Deal Was Profitable. Then Everyone Did Their Job.

The goods arrived. The customer paid. The deal lost two-thirds of its expected profit.

At the review meeting, procurement pointed to the negotiated discount. Logistics explained how it had rescued the delivery. Sales confirmed that it had kept the customer. Finance said every invoice had been authorised.

The managing director asked: “Then who approved losing €40,000?”

Nobody had approved that number. They had approved the decisions that produced it.

This is a hypothetical transaction. The numbers are illustrative. But the question deserves a real answer: can everybody do their job while the deal quietly stops doing its job for the business?

The discount looked like a victory

An industrial distributor agrees to supply €500,000 of components to a manufacturing customer. Its estimated costs total €440,000, leaving €60,000 of contribution before overheads: 12% of sales.

Procurement has secured a better supplier price on FCA terms at the supplier’s named factory, Incoterms® 2020. The distributor will arrange the onward transport. Sales has won the order. The delivery date fits the customer’s production schedule.

Those three letters are part of the economics. As ICC’s Incoterms checklist explains, under FCA the buyer accepts responsibility for arranging and paying for carriage, with risk transferring at the agreed delivery point. At the seller’s premises, delivery occurs when the goods are loaded onto the buyer-arranged vehicle.

FCA is not a bad choice. But its value depends on whether the buyer has priced and can manage the responsibilities it accepts. The supplier’s price is only part of the bill.

Then the supplier reports a delay. Some components are ready; the balance will follow. The customer cannot accept the original timetable without disrupting production.

There are choices. Wait for the full shipment. Split it. Accelerate the first batch. Renegotiate the customer’s schedule.

The distributor chooses to split and accelerate. Sensible, perhaps. Losing the customer could cost considerably more.

But this is the moment to reopen the economics of the transaction. The deal being executed is no longer the deal that procurement priced.

In McKinsey’s 2024 survey of 88 supply-chain leaders, nine in ten reported supply-chain challenges. Adapting is necessary. Preserving profit requires another calculation.

Three approvals. One nasty surprise.

Logistics approves premium transport for the first batch. The supplier arranges the split.

The buyer accepts additional handling to keep things moving. Later, storage charges accumulate while the second batch waits for revised delivery instructions. Sales offers the customer a concession for the inconvenience.

Each decision has an explanation. Each has an approver.

For our hypothetical distributor, the additional costs and revenue reduction are:

• €18,000 for premium freight above the original transport allowance.

• €12,000 for additional shipment preparation and handling.

• €10,000 in storage charges and the customer concession.

Expected contribution falls from €60,000 to €20,000: from 12% to 4% of the original sales value.

The transaction is completed. Two-thirds of its expected contribution has disappeared.

External cost shocks can be substantial. UNCTAD reported that the China Containerized Freight Index increased approximately 120% between October 2023 and June 2024.

Historical freight volatility makes transport assumptions worth revisiting.

The harder question is internal: when the distributor accepted each change, did anyone see its effect alongside the commitments already made?

Who was responsible for the whole deal?

Procurement was protecting supply. Logistics was protecting delivery. Sales was protecting the relationship. Finance was checking authorisation.

In this scenario, the business had owners for the individual decisions but no effective checkpoint for their combined commercial consequence.

It is tempting to call that a communication problem. Doing so lets management off too lightly. If preserving transaction value matters, somebody needs both responsibility for it and timely access to the relevant information.

“The invoices were approved” is an answer to a controls question. It does not establish that the revised deal remained commercially acceptable.

There is a wider governance warning here. McKinsey’s survey found that only a quarter of respondents had formal processes for discussing supply-chain issues at board level. That does not prove widespread transaction-level margin leakage. It does challenge the assumption that operational risk reliably receives sustained management attention.

Our distributor did eventually understand what happened. Unfortunately, understanding arrived with the reconciliation, after the choices had become costs.

Another dashboard won’t recover the money

Put this transaction on a dashboard and the boxes may all turn green. Order confirmed. Shipment dispatched. Goods received. Payment completed.

What should turn red is the gap between the original commercial expectation and the revised one.

A useful trade system would help an authorised person revisit that expectation while choices remain open:

• Does the agreed Incoterm still fit, with a precise delivery point and understood responsibilities?

• What do the revised freight costs and commitments mean for the deal’s economics?

• Have both parties accepted the changes, and do the instructions and documents reflect them?

Splitting a shipment does not automatically require a different Incoterm. It does require checking the consequences. Any revised term must be agreed by buyer and seller, then reflected in generated documentation and checked against uploaded documents. Incoterms allocate delivery obligations and risk; they do not determine ownership.

Those questions need an agreed transaction record, controlled changes and appropriate access. They also need someone willing to make a decision.

In ICC’s collection of 22 trade-digitalisation case studies, a SUCAFINA executive reported that standardised data elements reduced email exchanges and processing times. Protecting margins needs its own measurement.

Keeping the agreement connected to execution

This is where iTradeDigital helps: bringing buyers, sellers, freight forwarders and financial service providers into a shared workflow for negotiating and managing a trade. Its Incoterm guidance helps participants assess the delivery arrangement; the buyer and seller must agree the choice. Generated documents and centrally uploaded records keep the supporting information alongside the transaction.

For our distributor, that means keeping the shipment change connected to the agreed terms and the people executing them. It provides a foundation for informed decisions. Preserving the margin still requires accurate costs and someone accountable for reassessing the economics.

The distributor can keep its contribution calculation private while sharing approved changes with relevant participants. Before authorising premium freight, it can ask whether the customer will share the cost—or accept a different schedule.

The test is real trades: fewer decisions reconstructed afterwards, fewer contradictory instructions and earlier recognition of consequential changes.

Back at the review meeting, everybody can explain their decision. The missing explanation is why nobody reconsidered the deal as those decisions accumulated.

Think about your last difficult transaction. Was its commercial outcome actively managed—or merely calculated afterwards?